Recently a number of articles and report have appeared in the San Jose Mercury news, Silicon Valley’s leading daily newspaper, and in venture industry reports, highlighting the “A-Round Crunch”.

The so-called “A-Round Crunch” refers to a dearth of funding opportunities for companies who need that follow-on round of funding after Seed funding from Government and/or private investors.

Some of the factors that have led to this may be:

– the consolidation of the venture industry in recent years
– a year-over-year overall decline in venture funding

The more interesting question for our clients and our readers is “what does this mean for international entrepreneurs who want to launch their companies in Silicon Valley?

We will discuss this as one of the topics at our next webinar on Wednesday, April 17th – in the meantime, the short answer is we think this is a GOOD THING. In our opinion less venture money in the system has a number of beneficial effects:

– Scaling too early is a leading cause of startup failure
– Too much money leads to too many startups – “flavor of the month” – chasing the same markets
– Too much funding sloshing around encourages wasteful spending

The cost of getting a software/Internet startup to product/market fit has never been lower, and at US Market Access we are strong believers in the Lean approach to market and sales validation. Proven business models will continue to get funded, and our focus will continue to be on working with companies to test and validate business models.

You can check out the original San Jose Mercury articles we are referring to here:

‘A-Round crunch’ worries Silicon Valley startups looking for funding to grow beyond seed stage.

Seed Investing Report – Startup Orphans and the Series A Crunch

By, Jeff Snider, Lean Innovation Program Director at US MAC

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